Make user-pays equitable says FPA
Any move to a user-pays funding model for the Australian Securities and Investments Commission (ASIC) must be based on the entire financial services industry carrying the burden on an equitable basis, rather than just a few sectors of the industry, according to the Financial Planning Association (FPA).
The FPA is not opposing the introduction of a user-pays approach, but is arguing that it must be equitably based and has cited the user-pays model implemented by AUSTRAC as an excellent example.
FPA chief executive, Mark Rantall, said the AUSTRAC model was excellent because it required providers of designated services to pay according to their size and the complexity involved in regulating them.
He said that although supportive of the need for an appropriately funded regulator, the FPA cautioned against extreme fees and levies being imposed on financial planning businesses and pointed out that the consultation paper estimated a small self-licensed financial planning business would be subject to costs of greater than $6,000 per annum, not including the 1,200 per cent proposed increase in application costs to become an Australian Financial Services Licence (AFSL) holder to $11,000.
"If this is to be the case, the Government must also consider the potential flow-on impact of increased costs of financial advice for consumers - especially at a time when the industry is already facing significant new costs relating to complying with other regulatory requirements," Rantall said.
He pointed to a Rice Warner report into the financial advice industry post the Future of Financial Advice (FOFA) in July 2013 which suggested the costs of FOFA implementation were assumed to be as high as $700 million, with ongoing costs up to $375 million.
He said these did do not factor in additional levies and fees to support the role of the regulator.
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